China slashes US LPG imports amid trade war
FILE PHOTO: Ship and containers are shown at the port of Los Angeles in Los Angeles, California, U.S. July 16, 2018. REUTERS/Mike Blake
SINGAPORE: China has choked back on imports of liquefied petroleum gas (LPG) from the United States, traders and analysts said, turning to the Middle East for extra supplies amid the two countries' trade dispute.China bought nearly 3.6 million tonnes of US LPG in 2017, making the United States the country's second-largest supplier of the fuel used in petrochemicals, as well as for cooking, transport and heating.
However, US imports have come off dramatically over the course of 2018, before stalling completely in late August when China imposed an additional 25 per cent tariff on over 300 US goods, including LPG, in retaliation for US tariffs.Consultancy IHS Markit estimates US imports fell to barely 1 million tonnes during the first eight months of 2018, down from about 2.1 million tonnes for the same period last year, said He Yanyu, Executive Director for Natural Gas Liquids.The fall came as Chinese buyers wound back US purchases of LPG amid uncertainty about the impact of buying product from the United States, said a trader who tracks the fuel.No US LPG cargoes have landed in China since tariffs were imposed in late August, said Ong Han Wee at consultancy FGE.
"China has stopped shipping in US LPG cargoes as they are now too expensive," added a second trader who tracks LPG cargoes.The United States last year accounted for about 20 per cent of China's total LPG imports, which are currently running at about US$1 billion a month, based on Thomson Reuters calculation.The US gap is being filled largely by Qatar, the United Arab Emirates (UAE), Saudi Arabia and Kuwait, analysts said.The change comes as prices for the fuel, often a mix of propane and butane, spike in line with higher oil prices.
State-owned Saudi Aramco, whose contract prices are used as benchmarks in Asia, fixed its propane and butane contract prices for October at US$655 a tonne, the highest since 2014.US prices are also rising. The propane price at the Texan Mont Belvieu hub hit its highest since 2014 on Sep 28 at around 108 cents per gallon before easing to around 104 cents on Oct 9.This works out to about US$542 a tonne, based on Reuters calculations, but is above the Saudi Aramco price after taking into account freight and terminal charges and the additional 25 per cent tariff.China's LPG imports rose about 15 per cent to nearly 18.3 million tonnes in 2017, driven partly by new petrochemicals plants which use the propane dehydrogenation method to produce the raw material for plastics.IHS's He said LPG prices were likely to stay firm in November and December due to higher oil prices and winter demand.(Reporting by Seng Li Peng; editing by Richard Pullin)
Source : https://www.channelnewsasia.com/news/business/china-slashes-us-lpg-imports-amid-trade-war-10807452